February 16, 2018
Agriculture Funding in the Bipartisan Budget Act of 2018
On February 9, 2018, Congress passed the Bipartisan
Budget Act of 2018 (P.L. 115-123), which broadly
authorized supplemental appropriations, including for crop
and livestock losses from the 2017 hurricane season and
wildfires. The act also revised several existing agriculture
programs, which has long-term policy implications because
it changed farm bill statutes. This report discusses four of
the changes and accounts for all agriculture-related funding
in Table 1 (excluding the FY2018 continuing resolution for
general agricultural appropriations). The act adds $3.6
billion of disaster assistance in FY2018, adds $1.4 billion to
the 10-year farm bill baseline, and offsets an estimated $2.6
billion from agriculture by extending sequestration two
more years through FY2027.
Block Grants for Agricultural Losses
Title I, Division B, provides $2.36 billion to the Secretary
of Agriculture to cover crop, tree, bush, and vine losses
from 2017 hurricanes and wildfires that were not covered
under the Federal Crop Insurance Program (crop insurance)
and the Noninsured Crop Disaster Assistance Program
(NAP). Assistance is through block grants to eligible states,
as determined by the Secretary. Historically, assistance for
production losses has been provided directly from the U.S.
Department of Agriculture (USDA) to eligible farmers and
ranchers. It remains to be seen whether the requirement to
implement this assistance through states may add
complexity for participants or delay implementation.
The new program limits payments to no more than 85% of
losses, including payments from crop insurance and NAP.
For producers who did not purchase crop insurance or NAP
in advance of the natural disasters, payments are limited to
65% of losses. All participants are required to purchase
crop insurance or NAP for the next two years.
Because crop insurance and NAP are federally administered
programs, data needed to calculate payments under the
block grants are not currently available to states. Also,
covering the losses of farmers who chose not to purchase
insurance, as well as those who did, has the potential to
create a moral hazard for future participation. It is unclear
whether the new program duplicates payments under other
existing disaster programs (e.g., Tree Assistance Program
and Livestock Indemnity Program) that were not mentioned
specifically under the 85/65 loss coverage limitation.
Amended Permanent Disaster Programs
Section 20101 amends select permanent disaster assistance
programs through expanded coverage and funding levels.
The Livestock Indemnity Program (LIP), which makes
payments for livestock losses in excess of normal mortality,
was amended to include losses from selling livestock at a
reduced price due to adverse weather. The Emergency
Assistance for Livestock, Honey Bees, and Farm-Raised
Fish (ELAP) was amended to remove the $20 million
annual mandatory funding cap; effectively authorizing such
sums as necessary from mandatory funding sources. The
Tree Assistance Program (TAP), which pays to replant or
rehabilitate trees, bushes, and vines damaged by natural
disasters, was amended to increase the individual limit from
500 acres to 1,000 acres. Payment limitations of $125,000
per crop year for TAP and LIP were also eliminated. All
amendments apply retroactively to losses incurred on or
after January 1, 2017. In total, the Congressional Budget
Office (CBO) projects the cost of these changes to be $240
million over 10 years.
Treatment of Seed Cotton
Section 60101(a) amends the 2014 farm bill to add seed
cotton as a “covered commodity,” making cotton eligible
for farm commodity programs such as Price Loss Coverage
(PLC). Cotton had long been a covered commodity, but was
removed by the 2014 farm bill in order to comply with a
World Trade Organization dispute settlement. CBO projects
the cost of adding seed cotton as a covered commodity to
be $3 billion over 10 years; however, budget offsets—
including reallocating farm program payment acres back to
cotton, and repealing eligibility for the cotton stacked
income protection revenue insurance plan (created under
the 2014 farm bill) by cotton producers that participate in
Title I revenue support programs—are projected to lower
the net cost to $62 million. These changes, along with
changes to the disaster and dairy programs described below,
become part of the baseline to write the farm bill.
Dairy and Livestock Program Changes
Section 60101(b) amends the 2014 farm bill for the Margin
Protection Program (MPP) for dairy producers based on the
difference between milk price and feed cost. It raises the
default, or catastrophic, protection (from $4 per
hundredweight (cwt) to $5 per cwt), and raises the eligible
production level for reduced margin premiums from 4
million pounds to 5 million pounds. It also lowers the
premium cost for margin coverage under 5 million pounds.
MPP payments will be based on monthly instead of a twomonth average margin. The act extends MPP enrollment for
2018, and eliminates fees for beginning, veteran, or socially
disadvantaged producers. The CBO score of the provision
is a cost of $794 million over 10 years.
Separately, Section 60101(c) removes the $20 million cost
limitation on the livestock gross margin (LGM) insurance
programs. LGM allows cattle, dairy, and swine producers to
manage price risk by insuring their margins (market value
minus feed costs), though dairy producers are prohibited
from participating in both MPP and LGM. In 2016, dairy
producers represented 93% of LGM liability. CBO projects
the cost of removing the cap to be $308 million over 10
years.
https://crsreports.congress.gov
Agriculture Funding in the Bipartisan Budget Act of 2018
Table 1. Funding for Agriculture in the Bipartisan Budget Act of 2018
(Budget authority in millions of dollars)
Program
FY2018
FY2018-FY2027
2,360.0
2,360.0
0.0
68.0
Watershed and Flood Prevention Operations (Emergency Watershed Protection)
541.0
541.0
Emergency Conservation Program
400.0
400.0
Rural Water and Waste Disposal Program
165.5
165.5
Agricultural Research Service, Buildings and Facilities
22.0
22.0
Commodity Assistance Program (food assistance)
24.0
24.0
Rural Housing Insurance Fund
18.7
18.7
Nutrition Program for Women, Infants, and Children (WIC, infrastructure repairs)
14.0
14.0
Food and Drug Administration, Buildings and Facilities
7.6
7.6
Office of Inspector General
2.5
2.5
3,555.2
3,555.2
30.0
156.0
Tree Assistance Program (TAP; 1,000 acre limit, no cap)
7.0
52.0
Livestock Indemnity Payments (LIP; allow losses from reduced sales price)
3.0
21.0
Payment limitation removed on TAP, LIP
2.0
11.0
42.0
240.0
Seed cotton as covered commodity
0.0
2,961.0
Reallocate generic base acres
0.0
-2,188.0
Effect on Stacked Income Protection Plan (STAX)
0.0
-711.0
0.0
62.0
47.0
794.0
0.0
308.0
47.0
1,102.0
89.0
1,404.0
3,644.2
5,027.2
0.0
-2,600.0a
3,644.2
2,427.2
Disaster Assistance (Division B)
Block grants for agricultural disasters
Purchase requirement (2 yr.) for crop insurance
Subtotal, disaster assistance
Other disaster assistance through changes to the farm bill (Division B)
Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish program (ELAP)
Subtotal, Division B effect on farm bill budget
Improvements to Agriculture Programs (Division F)
Subtotal, seed cotton
Dairy Margin Protection Program (MPP)
Eliminate limit on Livestock Gross Margin (LGM) insurance program
Subtotal, dairy
Subtotal, changes affecting the farm bill baseline
Total additions (Division F&B)
Offsets affecting agricultural programs
Extend sequestration two more years through FY2027 (Division C, Sec. 30101(c))
Total, Agriculture
Source: CRS, compiled from P.L. 115-123; and CBO, “Cost Estimate for the Bipartisan Budget Act of 2018.”
a.
Accounts in Agriculture appropriations are reduced by $1.3 billion of sequestration in FY2018 (OMB, “Report to the Congress,” May 23,
2017). This amount was used to estimate the two-year Agriculture share from extending sequestration.
Jim Monke, Specialist in Agricultural Policy
Megan Stubbs, Specialist in Agricultural Conservation and
Natural Resources Policy
IF10829
https://crsreports.congress.gov
Agriculture Funding in the Bipartisan Budget Act of 2018
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https://crsreports.congress.gov | IF10829 · VERSION 2 · NEW